超微電腦 (SMCI) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Supermicro Fourth Quarter Fiscal 2020 Financial Results. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, James Kisner, Vice President, Investor Relations. Thank you. Please go ahead.

女士們，先生們，感謝您的支持，歡迎閱讀 Supermicro 2020 財年第四季度財務業績。 （操作員說明）請注意，今天的會議正在錄製中。 （操作員說明）我現在想將會議交給您今天的發言人，投資者關係副總裁 James Kisner。謝謝。請繼續。

Good afternoon, and thank you for attending Supermicro's call to discuss financial results for the fourth quarter of fiscal 2020, which ended June 30, 2020. By now you should have received a copy of the news release from the company that was distributed at the close of regular trading and is available on the company's website.

下午好，感謝您參加 Supermicro 討論截至 2020 年 6 月 30 日的 2020 財年第四季度財務業績的電話會議。到現在為止，您應該已經收到公司在結束時分發的新聞稿副本定期交易，可在公司網站上獲得。

As a reminder, during today's call, the company will refer to a presentation that is available to participants in the Investor Relations section of the company's website under the Events and Presentations tab. We have also published management scripted commentary on our website.

提醒一下，在今天的電話會議中，公司將在公司網站的“活動和演示”選項卡下的“投資者關係”部分中參考參與者可用的演示文稿。我們還在我們的網站上發布了管理腳本評論。

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements including without limitation, those regarding revenue, gross margin, operating expenses, other income and expenses, taxes, capital allocation and future business outlook, including the potential impact of COVID-19 on the company's business and results of operations. There are a number of risk factors that could cause Supermicro's future results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our most recent 10-K filing for 2019, our March 2020 10-Q and our other SEC filings. All of these documents are available on the Investor Relations page of Supermicro's website. We assume no obligation to update any forward-looking statements.

請注意，您在我們今天的討論中將聽到的一些信息將包含前瞻性陳述，包括但不限於有關收入、毛利率、運營支出、其他收入和支出、稅收、資本分配和未來業務前景的陳述，包括 COVID-19 對公司業務和經營業績的潛在影響。有許多風險因素可能導致 Supermicro 的未來結果與我們的預期存在重大差異。您可以在我們今天下午早些時候發布的新聞稿、我們最近的 2019 年 10-K 文件、我們 2020 年 3 月的 10-Q 和我們向美國證券交易委員會提交的其他文件中了解更多關於這些風險的信息。所有這些文件都可以在 Supermicro 網站的投資者關係頁面上找到。我們不承擔更新任何前瞻性陳述的義務。

Most of today's presentation will refer to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to the accompanying presentation or to our press release published earlier today. In addition, a reconciliation of GAAP to non-GAAP results is contained in today's press release and in the supplemental information attached to today's presentation.

今天的大部分演講將提及非 GAAP 財務業績和業務前景。有關我們的非 GAAP 財務措施的解釋，請參閱隨附的演示文稿或我們今天早些時候發布的新聞稿。此外，GAAP 與非 GAAP 結果的對賬包含在今天的新聞稿和今天演示文稿所附的補充信息中。

At the end of today's prepared remarks, we'll have a Q&A session for sell-side analysts to ask questions.

在今天準備好的評論結束時，我們將舉行問答環節，供賣方分析師提問。

I'll now turn the call over to Charles Liang, Chairman and Chief Executive Officer.

我現在將電話轉交給董事長兼首席執行官查爾斯梁。

Thank you, James, and good afternoon, everyone. Today, we have released our fiscal fourth quarter and full year fiscal 2020 financial results. Now let's take a look at some highlights from the quarter.

謝謝你，詹姆斯，大家下午好。今天，我們發布了第四財季和 2020 財年全年財務業績。現在讓我們來看看本季度的一些亮點。

Our fiscal fourth quarter net sales totaled $896 million, up 5% year-over-year and 16% sequentially. Our fiscal Q4 earnings per share was $0.68. We saw double-digit growth in Edge applications and some key data center and cloud customers. This was offset by softness from some customers who are seeing the worst effect of the COVID-19 threat.

我們第四財季的淨銷售額總計 8.96 億美元，同比增長 5%，環比增長 16%。我們第四季度的每股收益為 0.68 美元。我們看到邊緣應用程序以及一些關鍵數據中心和雲客戶實現了兩位數的增長。這被一些看到 COVID-19 威脅最嚴重影響的客戶的疲軟所抵消。

Before we dive into the financial details, I want to provide you an update on our business strategy. Last quarter, we talked about our 4 strategic high-growth market segments, and we are aligning our resource accordingly to speed up our growth for the coming quarter and years. These 4 strategic market are: first, organic enterprise and channel business, including server, storage, IoT and AI, which are our historical growth areas; second, our new 5G, Edge and Telco business; third, our new large data center and public cloud; and fourth, software and global service.

在深入探討財務細節之前，我想向您介紹一下我們的業務戰略的最新情況。上個季度，我們談到了我們的 4 個戰略性高增長細分市場，我們正在相應地調整我們的資源，以加快我們在未來一個季度和幾年的增長。這4個戰略市場是：第一，有機企業和渠道業務，包括服務器、存儲、物聯網和人工智能，這是我們歷史上的增長領域；第二，我們新的 5G、Edge 和 Telco 業務；第三，我們新的大型數據中心和公共雲；第四，軟件和全球服務。

I'm pleased to share that we have made good progress in 3 of these 4 market categories this quarter. The strategy enable us to win more high-profile customers among enterprise, data center and 5G, Telco infrastructure builders. In addition, we have continued our investment and growth trend in software and service by doubling this team's head count over the past year to prepare a series of higher-value product line.

我很高興與大家分享，本季度我們在這 4 個市場類別中的 3 個領域取得了良好進展。該戰略使我們能夠在企業、數據中心和 5G、電信基礎設施建設者中贏得更多知名客戶。此外，我們通過在過去一年中將該團隊的人數翻了一番來準備一系列更高價值的產品線，從而延續了我們在軟件和服務方面的投資和增長趨勢。

Unfortunately, COVID-19 posed significant disruption on our organic enterprise and channel business and slowed their growth in the near term. But we are encouraged by our progress in our 2 new strategic drivers this quarter, the large DC and cloud as well as 5G and Telco. And they prove that our overall growth strategy is working well and will drive much stronger results in the future.

不幸的是，COVID-19 對我們的有機企業和渠道業務造成了重大破壞，並在短期內減緩了它們的增長。但我們對本季度在 2 個新戰略驅動因素（大型 DC 和雲以及 5G 和電信）方面取得的進展感到鼓舞。他們證明我們的整體增長戰略運作良好，並將在未來帶來更強勁的業績。

Going forward, we also plan to accelerate our unique online business into an official phase to complement our strategy. We have been preparing and fine-tuning this business for a few years. And I am optimistic that it will speed up, bringing new revenue growth and profitability to us. How do we move this business into an official phase? Supermicro pride itself in product innovation, which have been the key to our success in the past 27 years. Our server system building blocks, application optimization and resource savings design vision separate us from our competitors, and we are very excited by our recent product introductions.

展望未來，我們還計劃將我們獨特的在線業務加速進入正式階段，以補充我們的戰略。幾年來，我們一直在準備和微調這項業務。我樂觀地認為它會加速，為我們帶來新的收入增長和盈利能力。我們如何使這項業務進入正式階段？ Supermicro 以產品創新為榮，這是我們在過去 27 年中取得成功的關鍵。我們的服務器系統構建塊、應用程序優化和資源節約設計願景使我們從競爭對手中脫穎而出，我們對最近推出的產品感到非常興奮。

Last quarter, we announced a new AI and machine learning system portfolio that supports the new NVIDIA A100 Tensor Core GPUs based on the latest AMD EPYC processors and Intel coming soon processers, armed with up to 5 PetaFLOPS of performance per 4U system with optimal thermal solution. These systems enable researchers to trend the most sophisticated AI networks at an unprecedented speed.

上個季度，我們宣布了一個新的人工智能和機器學習系統產品組合，支持基於最新的 AMD EPYC 處理器和英特爾即將推出的處理器的新 NVIDIA A100 Tensor Core GPU，每個 4U 系統配備高達 5 PetaFLOPS 的性能和最佳散熱解決方案.這些系統使研究人員能夠以前所未有的速度研究最複雜的人工智能網絡。

Next, we have introduced a new 4-way enterprise platform based on the third-generation Intel Xeon Scalable processor, which is optimized to take on deep analytics and mission-critical applications. Most importantly, this quarter, our R&D is hard at work to expand our extensive AMD product lines. And working closely with our partners to seed our next-generation X12 Intel processor-based product line. These engagements will enhance the strong foundation for our growth in the coming quarters and years.

接下來，我們推出了一個基於第三代英特爾至強可擴展處理器的全新 4 路企業平台，該平台經過優化以支持深度分析和任務關鍵型應用程序。最重要的是，本季度，我們的研發部門正在努力擴展我們廣泛的 AMD 產品線。並與我們的合作夥伴密切合作，打造我們下一代基於 X12 英特爾處理器的產品線。這些參與將為我們在未來幾個季度和幾年的增長奠定堅實的基礎。

At our recent virtual Storage Summit co-hosted with our partner, Nutanix and Intel, we discussed our completely refreshed storage portfolio. At the event, we introduced storage systems that offer highest data density and optimized system performance for our customers, including our brand-new, second-generation top loading 60- and 90-bay storage, petascale EDSFF, high-performance storage and software-defined solutions.

在我們最近與我們的合作夥伴 Nutanix 和英特爾共同舉辦的虛擬存儲峰會上，我們討論了我們完全更新的存儲產品組合。在這次活動中，我們推出了為我們的客戶提供最高數據密度和優化系統性能的存儲系統，包括我們全新的第二代頂部加載 60 和 90 盤位存儲、petascale EDSFF、高性能存儲和軟件-定義的解決方案。

Switching gear to 5G. We have also been recognized recently by VDC Research as the Top 5G, Telco and Edge solution provider based on the highest customer satisfaction for its application-optimized products. As distributed compute become more critical for 5G infrastructure implementations, our Edge solutions are optimized to be deployed, managed, maintained and secured on a mass scale. We see that most of the 5G, Telco and Edge business opportunity are still in the early phase of deployments. This represent great market share opportunities for Supermicro.

切換到 5G。我們最近還被 VDC Research 評為頂級 5G、電信和邊緣解決方案提供商，基於其應用優化產品的最高客戶滿意度。隨著分佈式計算對於 5G 基礎設施實施變得越來越重要，我們的邊緣解決方案經過優化，可以大規模部署、管理、維護和保護。我們看到大部分 5G、電信和邊緣業務機會仍處於部署的早期階段。這為 Supermicro 帶來了巨大的市場份額機會。

I want to get back and talk a bit more about our calendar quarter and business outlook. The logistical issues, rising shipping costs and employee working from home caused by the spread of COVID-19 in U.S. to disrupt our business in short term. It lower our business and revenue by some points and increase our business cost in short term. As of this time, we have been aggressively shifting and growing certain operation and R&D works to Taiwan. By aggressively and efficiently growing our operation in Taiwan, I'm confident that this big step of change will yield bigger, long-term reward, as our overall cost will be much lower when our operation and production volume in Taiwan ramps. However, we will also continue to optimize our operation in U.S. by better business and production automation to address the ever-changing market dynamics.

我想回去多談談我們的日曆季度和業務前景。 COVID-19 在美國的傳播導致物流問題、運輸成本上升和員工在家工作，短期內會擾亂我們的業務。它在一定程度上降低了我們的業務和收入，並在短期內增加了我們的業務成本。截至目前，我們一直在積極地將某些業務和研發工作轉移和發展到台灣。通過積極有效地發展我們在台灣的業務，我相信這一重大變革將產生更大的長期回報，因為當我們在台灣的業務和生產量增加時，我們的總體成本將大大降低。然而，我們還將通過更好的業務和生產自動化來繼續優化我們在美國的運營，以應對不斷變化的市場動態。

In summary, we are able to continue our growth moderately despite the continued disruption caused by COVID-19. We will provide a near-term outlook today that reflects some results from those threats of COVID-19. However, we are very encouraged as we look into the future, as the digital world continue to progress, evolve and grow. Rest assured, we are using this period of disruption as an opportunity to improve our business, global structure by shifting and growing certain portion of operation, production and R&D to Taiwan, a much lower cost country and less COVID-19-disrupted area. This change will result in our mid-term and long-term business revenue and profitability growth. Our enhanced mix of hardware, software and service hybrid focus is the path forward for us to build higher product value, gross margin and revenue growth over time. Our strategy will empower Supermicro, re-accelerate our revenue growth and resume our long history of strong market share gain. With that, we remain very bullish on our long-term opportunity to penetrate our roughly $100 billion TAM.

總而言之，儘管 COVID-19 造成了持續的破壞，但我們能夠繼續適度增長。我們今天將提供近期展望，反映 COVID-19 威脅的一些結果。然而，當我們展望未來時，我們感到非常鼓舞，因為數字世界將繼續進步、發展和成長。請放心，我們正在利用這段混亂時期作為改善我們的業務和全球結構的機會，通過將運營、生產和研發的某些部分轉移和增長到台灣，台灣是一個成本低得多的國家和受 COVID-19 破壞較少的地區。這一變化將導致我們的中長期業務收入和盈利能力增長。我們增強的硬件、軟件和服務混合重點組合是我們隨著時間的推移建立更高的產品價值、毛利率和收入增長的前進道路。我們的戰略將賦予 Supermicro 權力，重新加速我們的收入增長，並恢復我們長期強勁的市場份額增長歷史。因此，我們仍然非常看好我們滲透大約 1000 億美元 TAM 的長期機會。

Finally, we are pleased to announce today a $30 million stock repurchase program. Although the starting amount is modest, we would like to start utilizing our cash on hand to increase shareholders' value while maintaining sufficient cash resource to fund our operation and aggressive growth plan. The stock repurchase program reflects our ongoing commitment to improve the value of our common stock and will help us to offset dilution from our equity plan.

最後，我們今天很高興地宣布一項 3000 萬美元的股票回購計劃。儘管起始金額不高，但我們希望開始利用我們手頭的現金來增加股東價值，同時保持足夠的現金資源來為我們的運營和積極的增長計劃提供資金。股票回購計劃反映了我們對提高普通股價值的持續承諾，並將幫助我們抵消股權計劃的稀釋。

I will now hand the call over to Kevin to review the results of the quarter in more detail.

我現在將電話轉給凱文，讓他更詳細地審查本季度的結果。

Thank you, Charles. First, I'd like to thank our employees, customers, investors and partners for their support as we navigate the ongoing challenges of the COVID-19 pandemic.

謝謝你，查爾斯。首先，我要感謝我們的員工、客戶、投資者和合作夥伴在我們應對 COVID-19 大流行的持續挑戰時給予的支持。

Before jumping into the details of the quarter, we'd like to provide a brief update on the status of our operations. Recall, our largest production and employee presence is in San Jose, California. We continue to operate under increased safety measures for the health of our employees. While we have adapted well to current conditions, we continue to maintain a higher level of inventory and are adjusting our logistics to moderate costs.

在進入本季度的細節之前，我們想簡要介紹一下我們的運營狀況。回想一下，我們最大的生產和員工在加利福尼亞州聖何塞。為了員工的健康，我們將繼續在加強的安全措施下運營。雖然我們已經很好地適應了當前的情況，但我們繼續保持較高的庫存水平，並正在調整我們的物流以降低成本。

All that said, while we aren't satisfied with our operating profitability this quarter, we are proud of our results under these unprecedented times. While we don't have unique insight into the long-term trajectory of a global economic recovery from COVID-19, we believe that much of the effects we are seeing on our financials today and over the near term will likely prove transitory.

總而言之，雖然我們對本季度的運營盈利能力不滿意，但我們為在這個前所未有的時代取得的成果感到自豪。雖然我們對全球經濟從 COVID-19 復甦的長期軌跡沒有獨特的見解，但我們相信，我們今天和短期內看到的對我們財務狀況的影響很可能是暫時的。

Now let me turn to the details of the quarter. Our fiscal fourth quarter revenue totaled $896 million. This reflects a 16% quarter-on-quarter increase from the third quarter of fiscal 2020 and a 5% increase from the same quarter of last year. Systems comprised 83% of total revenue and volumes of systems and nodes shipped were up sequentially and year-over-year. System ASPs increased quarter-on-quarter but declined year-over-year.

現在讓我談談本季度的細節。我們第四財季的收入總計 8.96 億美元。這反映出比 2020 財年第三季度環比增長 16%，比去年同期增長 5%。系統佔總收入的 83%，出貨的系統和節點數量環比和同比增長。系統 ASP 環比增長，但同比下降。

Turning to geographic performance. On a year-on-year basis, the U.S. was up 4%, EMEA grew 13% and Asia was flat. On a sequential basis, U.S. sales grew 27% as we saw strength at a number of Internet data center and enterprise customers. EMEA grew 3% and Asia grew 2% sequentially.

轉向地理性能。與去年同期相比，美國增長 4%，歐洲、中東和非洲增長 13%，亞洲持平。在連續的基礎上，美國銷售額增長了 27%，因為我們看到許多互聯網數據中心和企業客戶的實力。歐洲、中東和非洲地區環比增長 3%，亞洲增長 2%。

Before moving down the P&L, I'd like to point out a number of discrete items worth noting for investors. First, we recorded $17.4 million in expense related to incentive awards to our employees that impacted both cost of sales and operating expense. Remember, on our February call, we mentioned that we had expected to incur additional onetime charges of $35 million to $40 million. Second, we paid out approximately $26 million for those awards whose performance criteria was achieved in this quarter. Third, we recovered $4.8 million from customers related to previously reserved bad debt. Lastly, we released $3.3 million in tax reserves following the finalization of certain foreign tax returns for prior years, and our tax rate was reduced for export sales from the U.S.

在降低損益之前，我想指出一些值得投資者註意的離散項目。首先，我們記錄了 1740 萬美元與員工獎勵相關的費用，這些費用影響了銷售成本和運營費用。請記住，在我們 2 月份的電話會議上，我們曾提到我們預計會產生 3500 萬至 4000 萬美元的額外一次性費用。其次，我們為本季度達到績效標準的那些獎項支付了大約 2600 萬美元。第三，我們從與先前保留的壞賬相關的客戶那裡收回了 480 萬美元。最後，在前幾年的某些外國納稅申報表最終確定後，我們釋放了 330 萬美元的稅收儲備，並且降低了美國出口銷售的稅率。

Turning back to our non-GAAP results. Q4 gross margin was 14%, down 150 basis points year-on-year and 370 basis points quarter-on-quarter. As you've likely heard from other market participants, commodity costs have been volatile. Gross margin was impacted by commodity costs, COVID-related costs and customer mix in that order of magnitude.

回到我們的非 GAAP 結果。 Q4毛利率為14%，同比下降150個基點，環比下降370個基點。正如您可能從其他市場參與者那裡聽說的那樣，大宗商品成本一直在波動。毛利率受到商品成本、COVID 相關成本和客戶組合的影響。

Turning to operating expenses. Q4 OpEx on a GAAP basis decreased 3% quarter-on-quarter to $114 million. On a non-GAAP basis, operating expenses increased 5% quarter-on-quarter and year-on-year to $91 million. The sequential increase in non-GAAP OpEx was primarily due to the absence of $9-point million (sic) [$9.5 million] in R&D credits the previous quarter. G&A also benefited from the aforementioned debt recovery. Other income and expense was a $0.7 million loss as compared to a $0.9 million gain last quarter related to the foreign exchange remeasurement of our Taiwan-dollar-denominated loans.

轉向運營費用。基於 GAAP 的第四季度運營支出環比下降 3% 至 1.14 億美元。按非美國通用會計準則計算，運營費用環比和同比增長 5%，達到 9100 萬美元。非 GAAP 運營支出的環比增長主要是由於上一季度沒有 9 億美元（原文如此）[950 萬美元] 的研發信貸。 G&A 也受益於上述債務回收。其他收入和支出為 70 萬美元虧損，而上一季度與新台幣計價貸款的外匯重新計量相關的收益為 90 萬美元。

This quarter, our taxes were a $7 million benefit on a GAAP basis and a $2 million benefit on a non-GAAP basis. In both cases, we benefited from our new tax structure and settlement on a tax audit, as highlighted in the discrete items mentioned earlier.

本季度，我們的稅收是 GAAP 基礎上的 700 萬美元收益和非 GAAP 基礎上的 200 萬美元收益。在這兩種情況下，我們都受益於我們的新稅收結構和稅務審計結算，如前面提到的離散項目中所強調的那樣。

Lastly, our joint venture contributed income of $3.5 million this quarter as compared to a $1.1 million loss in the previous quarter and income of $0.9 million in the same quarter a year ago.

最後，我們的合資企業本季度貢獻了 350 萬美元的收入，而上一季度虧損 110 萬美元，去年同期收入 90 萬美元。

Q4 non-GAAP earnings per share totaled $0.68 per diluted share compared to $0.84 last quarter and $0.69 last year. Cash used from operations totaled $96 million as we paid out $26 million related to the onetime employee bonuses. And our accounts receivable was up $71 million sequentially on increased sales.

第 4 季度非 GAAP 每股攤薄收益總計 0.68 美元，上一季度為 0.84 美元，去年為 0.69 美元。運營中使用的現金總計 9600 萬美元，因為我們支付了與一次性員工獎金相關的 2600 萬美元。由於銷售額增加，我們的應收賬款環比增加了 7100 萬美元。

Timing factors contributed to the large use of cash in Q4, and we currently expect cash flow from operations to improve in Q1. CapEx totaled $9 million, resulting in free cash outflow of $105 million. Our closing balance sheet cash position, which excludes restricted cash, was $211 million. This quarter, our cash conversion cycle was 87 days, down from 92 days last quarter and within our target range of 85 to 90 days. Days sales outstanding was 37 days. Day payables outstanding totaled 52 days and inventory days was 101.

時間因素導致第四季度大量使用現金，我們目前預計第一季度運營現金流將有所改善。資本支出總計 900 萬美元，導致自由現金流出 1.05 億美元。我們的期末資產負債表現金頭寸（不包括受限現金）為 2.11 億美元。本季度，我們的現金轉換週期為 87 天，低於上一季度的 92 天，並且在我們 85 至 90 天的目標範圍內。待售天數為 37 天。應付賬款天數總計 52 天，存貨天數為 101 天。

Now turning to the outlook for our business. The company expects net sales for the quarter ending September 30, 2020, in the range of $720 million to $800 million. In addition to typically somewhat weaker seasonal trends, we are cautious, given significant economic uncertainty. We expect gross margins to improve roughly 70 to 125 basis points sequentially as commodity cost pressures abate. With regard to operating expense, the $4.8 million debt recovery will not repeat, and we expect sequential increases in compensation, product development and the completion of our year-end audit. We expect audit costs to revert to normal levels in the December quarter.

現在轉向我們的業務前景。該公司預計截至 2020 年 9 月 30 日的季度淨銷售額在 7.2 億美元至 8 億美元之間。除了通常略顯疲軟的季節性趨勢外，鑑於重大的經濟不確定性，我們也持謹慎態度。隨著大宗商品成本壓力的減弱，我們預計毛利率將連續提高約 70 至 125 個基點。關於運營費用，480 萬美元的債務追回不會重複，我們預計薪酬、產品開發和年終審計的完成將依次增加。我們預計審計成本將在 12 月季度恢復到正常水平。

We anticipate the GAAP and non-GAAP tax rate to be 18% for the year. We expect GAAP earnings per share of $0.03 to $0.27 and non-GAAP earnings per share of $0.10 to $0.35, both on a diluted basis.

我們預計今年的 GAAP 和非 GAAP 稅率為 18%。我們預計攤薄後的 GAAP 每股收益為 0.03 美元至 0.27 美元，非 GAAP 每股收益為 0.10 美元至 0.35 美元。

Our management team is focused on guiding our company through the continuing challenges presented by COVID-19. Although we're unable to predict the extent to which COVID-19 may further impact our business operations, financial performance and results of operations, we believe we're well positioned financially and strategically as we continue to serve our customers.

我們的管理團隊專注於指導我們的公司應對 COVID-19 帶來的持續挑戰。儘管我們無法預測 COVID-19 可能在多大程度上進一步影響我們的業務運營、財務業績和運營結果，但我們相信，隨著我們繼續為客戶服務，我們在財務和戰略上處於有利地位。

Finally, as Charles mentioned earlier, we currently announced that our Board of Directors has authorized the company to repurchase up to $30 million of its common stock in a new share repurchase program. The program is effective until December 31, 2020, or until the authorized funds are exhausted under a 10b5-1 plan. With this small step, we are signaling to investors that we are committed to creating shareholder value with an efficient use of capital.

最後，正如查爾斯之前提到的，我們目前宣布，我們的董事會已授權公司在一項新的股票回購計劃中回購最多 3000 萬美元的普通股。該計劃有效期至 2020 年 12 月 31 日，或直至 10b5-1 計劃下的授權資金用盡。通過這一小步，我們向投資者發出信號，表明我們致力於通過有效利用資本來創造股東價值。

Thank you, Kevin. Operator, we're now ready to open the queue for questions.

謝謝你，凱文。接線員，我們現在可以開始提問了。

(Operator Instructions) And your first question comes from the line of Aaron Rakers from Wells Fargo.

（操作員說明）您的第一個問題來自富國銀行的 Aaron Rakers。

Yes. Maybe the first question, if you can just talk a little bit about the demand environment. There's been a lot of discussion out there about kind of the cloud, the Internet data center, large data center customers going through some level of a digestion phase. So I'm curious what your insight is in terms of the demand profile there that you're seeing into the current quarter and whether or not you have any kind of indicators of a digestion phase materializing and any extent in terms of how material that might be or how long that could last?

是的。也許是第一個問題，如果你能簡單談談需求環境。已經有很多關於雲、互聯網數據中心、大型數據中心客戶正在經歷某種程度的消化階段的討論。因此，我很好奇您對當前季度的需求概況有何見解，以及您是否有任何消化階段具體化的指標，以及材料可能達到的程度是或能持續多久？

Yes. Very good question. We did see a large data center, especially those social networking, those streaming even gaming large data center have a strong demand during this COVID-19 period, especially. And we have most focus on the other side, enterprise channel. So that kind of increased demand, indeed, that did not help us a lot in June. But likewise, say now, we are extending our operation and business to Taiwan. Hopefully, our cost will decrease. So we will be able to more aggressively participate in those large data center and cloud. And I believe this business may not be seen for another few quarters probably.

是的。很好的問題。我們確實看到大型數據中心，尤其是那些社交網絡，那些流媒體甚至遊戲大型數據中心在這個 COVID-19 期間有強烈的需求，尤其是。我們最關注的是企業渠道的另一面。因此，這種需求的增加確實在 6 月份對我們沒有太大幫助。但同樣，比如說現在，我們正在將我們的業務和業務擴展到台灣。希望我們的成本會降低。因此我們將能夠更積極地參與那些大型數據中心和雲。而且我相信可能再過幾個季度才能看到這項業務。

Yes. Aaron, I can augment that describing a little bit of what we're seeing in the current quarter. So I think evidence that would align with what you're hearing from other parties is that as we entered into July, we definitely saw that our customers were taking a pause after having a strong June. And so I think as opposed to last quarter's comments, where I said we started off strong, and let's see where we go; this quarter, we're seeing a pause in July, yet just currently now, we're starting to see an order -- a flow -- an order flow pickup. So we hope that, that is a good turn to our July results. So a little bit different topology as compared to last quarter.

是的。亞倫，我可以進一步描述我們在本季度看到的一些情況。所以我認為與你從其他方面聽到的一致的證據是，當我們進入 7 月時，我們肯定看到我們的客戶在經歷了強勁的 6 月之後正在暫停。因此，我認為與上一季度的評論相反，我說我們開局強勁，讓我們看看我們的發展方向；本季度，我們看到 7 月出現停頓，但就在目前，我們開始看到訂單 - 流量 - 訂單流量回升。所以我們希望，這是我們 7 月份業績的良好轉折。與上一季度相比，拓撲結構略有不同。

Okay. That's helpful. And then you talked a little bit, I think in your prepared remarks, about kind of "significant component cost headwinds", but it sounds like those might be abating here as we move into this current quarter. Can you help us understand or appreciate how you're kind of seeing component cost trends into this current quarter and kind of how much of that 70 to 100 basis point improvement in gross margin might be assumed from component cost dynamics?

好的。這很有幫助。然後你談了一點，我想在你準備好的發言中，關於某種“顯著的組件成本逆風”，但聽起來隨著我們進入本季度，這些逆風可能會在這裡減弱。您能否幫助我們理解或欣賞您如何看待本季度的組件成本趨勢，以及毛利率提高 70 到 100 個基點中有多少可能來自組件成本動態？

Sure. I think what we're seeing is that you got a little bit heated with component costs, and things are moderating a little bit. For us, Aaron, it takes time for us to kind of digest inventories that we have on hand. And we believe that towards the end of the quarter, we'll be able to see some moderation in component costs. I think that's a fair portion of what we described in terms of our expectations for Xeon improvement.

當然。我認為我們所看到的是您對組件成本有點過熱，而且情況正在緩和。對我們來說，亞倫，我們需要時間來消化手頭的庫存。我們相信，到本季度末，我們將能夠看到組件成本有所下降。我認為這是我們對 Xeon 改進的期望所描述的相當一部分。

Other things that we continue to battle are the momentary high cost of logistics and freight. As we kind of mentioned earlier, it was tough in the last quarter. It kind of loosened up in June. It was looser in July and seems to be tightening up a little bit. But beyond that, what we've done is we've looked at some of our components that we bring from Asia to look at what are those that we can start shipping by sea. It might take a little bit more in terms of inventory holding, but it's definitely worth it when it comes to some components like motherboards and those kind of things, we can afford to do by sea. So we're kind of managing that. And hopefully, we'll have some improvement in that arena as well.

我們繼續戰鬥的其他事情是物流和貨運的暫時高成本。正如我們之前提到的，上個季度很艱難。六月有點鬆動。它在 7 月份較為寬鬆，現在似乎正在收緊一點。但除此之外，我們所做的是研究了我們從亞洲帶來的一些組件，看看哪些組件可以開始海運。就庫存持有而言，這可能需要多一點，但對於某些組件，如主板和類似的東西，這絕對是值得的，我們可以負擔得起海運。所以我們有點管理。希望我們在那個領域也能有所改進。

Okay. Very helpful. And then a final quick question. There's a lot of discussion out there about Intel timing, and I know it might be longer term in nature around the cadence of their product cycles. But any thoughts that you guys might offer in terms of how the cadence of Intel's moves product-cycle-wise, 10-nanometer, 7-nanometer affects your kind of outlook and appreciating that's probably a longer-term question.

好的。很有幫助。然後是最後一個快速問題。關於英特爾的時間安排有很多討論，而且我知道圍繞其產品週期的節奏，本質上可能是長期的。但是你們可能會就英特爾在產品週期、10 納米、7 納米方面的節奏如何影響你們的前景和欣賞提出任何想法，這可能是一個長期問題。

Yes. I mean, Intel, as you know, they postponed their 10-nanometer and also the coming 7-nanometer technology. So that did impact some to us. However, we also grow AMD product line very aggressively. So overall, there are some impact for our maybe September quarter. But long term, we should be able to adjust efficiently.

是的。我的意思是，如你所知，英特爾推遲了 10 納米和即將推出的 7 納米技術。所以這確實對我們產生了一些影響。然而，我們也非常積極地發展 AMD 產品線。所以總的來說，對我們可能在九月的季度有一些影響。但從長遠來看，我們應該能夠有效地進行調整。

Yes. Aaron, that's -- that's one of the considerations as we look forward when I said that product development costs may increase a little bit is that now we have to think about multiple platforms, given the dynamics of Intel's timing and pushing the pedal to the middle a little bit more on alternate processors.

是的。亞倫，那是——當我說產品開發成本可能會增加一點時，我們期待的考慮之一是現在我們必須考慮多個平台，考慮到英特爾的時機動態並將踏板推到中間關於備用處理器的更多信息。

Your next question comes from the line of Ananda Baruah from Loop Capital.

你的下一個問題來自 Loop Capital 的 Ananda Baruah。

A few, if I could, Charles and Kevin. Kevin, to start, just a point of clarification. When you were talking about sort of seeing a pause in July after June and now seeing order flow pick up, was that your enterprise and channel business? Or was that the hyperscale public cloud business?

一些，如果可以的話，查爾斯和凱文。凱文，首先，只是澄清一點。當您談論在 6 月之後看到 7 月暫停，現在看到訂單流量回升時，那是您的企業和渠道業務嗎？還是超大規模公共雲業務？

I think it's -- we're seeing it on multiple fronts, so not necessarily the hyperscale, but probably more traditional.

我認為這是——我們在多個方面看到它，所以不一定是超大規模，但可能更傳統。

Okay. Okay. Great. Got it. So you're starting to see a pickup again. And I was going to ask you about the linearity of slowing, but it sounds like it was really a month of July dynamic. Are you -- do you -- any context that you can provide for how we should think about like seasonality into December? I know it's probably lack of visibility, a little murky right now. But any context just for a modeling would probably be useful for us.

好的。好的。偉大的。知道了。所以你又開始看到皮卡了。我本來想問你關於放緩的線性問題，但聽起來這真的是 7 月的一個月動態。您是否 - 您可以提供我們應該如何考慮 12 月季節性的任何背景？我知道這可能是缺乏能見度，現在有點模糊。但是任何僅用於建模的上下文都可能對我們有用。

Yes. That's a little bit hard to call right now. I believe that we all are hoping that things return to normal a little bit and that we have some seasonality certainly in December and maybe a little bit better than normal.

是的。現在有點難以調用。我相信我們都希望事情能稍微恢復正常，我們在 12 月肯定有一些季節性，而且可能比正常情況好一點。

I don't know, Charles, do you have anything to augment that?

我不知道，查爾斯，你有什麼可以補充的嗎？

Yes. I mean September traditionally our soft quarter. And December, we had 20% higher than September in the history. So this year, I believe we will have some impact like that, although coronavirus impacting us, but we are doing what's possible to adjust our workload. We will feel December will be a much stronger quarter, yes. That will be still the case.

是的。我的意思是九月傳統上是我們的軟季度。而 12 月，我們比歷史上的 9 月高出 20%。所以今年，我相信我們會產生這樣的影響，雖然冠狀病毒影響了我們，但我們正在盡一切可能調整我們的工作量。我們會覺得 12 月將是一個更強勁的季度，是的。仍將如此。

Really helpful. And I guess just with regards to the cost, sort of the cost optimizing, and you highlighted shift to -- kind of production shift to Taiwan. You guys -- you also mentioned accelerating your online business. Could you just walk us through the different initiatives that will help optimize the cost base? And then maybe give us some sense of timing of how sort of you might begin to be able to benefit from those optimization efforts?

真的很有幫助。我想就成本而言，某種成本優化，你強調轉移到 - 某種生產轉移到台灣。你們——你們還提到了加速你們的在線業務。您能否向我們介紹有助於優化成本基礎的不同舉措？然後也許可以讓我們了解一下您將如何開始能夠從這些優化工作中受益的時間？

Yes. I mean, since about 9 months ago or even 12 months ago, we started to grow in Taiwan aggressively, including engineering, the operation and even sales, even customer service. So that transition will be up now, especially for coronavirus. As you may know, the coronavirus impact in Taiwan is much less than United States. So we are moving to Taiwan for cost reason and for coronavirus impact reason as well. And the result is gradually helping us. And I would like to say that December quarter, it will have more next year, for sure, will be much more efficient. And it's kind of mid-term and long-term investment, but December quarter, we will see some help.

是的。我的意思是，大約 9 個月前甚至 12 個月前，我們開始在台灣積極發展，包括工程、運營甚至銷售，甚至客戶服務。所以這種轉變現在就開始了，特別是對于冠狀病毒。如您所知，冠狀病毒對台灣的影響遠小於美國。因此，出於成本原因和冠狀病毒影響原因，我們將搬到台灣。結果正在逐漸幫助我們。我想說的是，12 月這個季度，明年肯定會有更多，效率會更高。這是一種中長期投資，但在 12 月季度，我們會看到一些幫助。

As to our online business, it's basically a complementary business to help our customers to get support, especially spare parts or when they need a mobile system, they can order from online. And that system we have been preparing for many years. And now it is getting very mature. So we start to small-scale business last few quarters. And then we will have a formal official release very soon.

至於我們的在線業務，它基本上是一項輔助業務，可以幫助我們的客戶獲得支持，尤其是備件，或者當他們需要移動系統時，他們可以從網上訂購。我們已經準備了很多年的那個系統。現在它變得非常成熟。所以我們最近幾個季度開始做小規模業務。然後我們很快就會有正式的官方發布。

That's really helpful, Charles. I really appreciate that. Let me just sneak one more in here. Just -- this is on 5G, your 5G initiatives. And then you had made mentioned a couple of times on the call about seeing public cloud progress. Could you just give us -- put some context around what's going on right now, what you're seeing and experiencing in your 5G and public cloud initiatives? And appreciating that, Kevin, you said that it's been sort of stop, start -- sort of stop, start again. But would love to get a sense of contextually what you guys see going on, the progress that you've made. And then do you think these can be, I don't know, have an impact in the December quarter if things come together for you?

這真的很有幫助，查爾斯。我真的很感激。讓我再偷偷進來一個。只是 - 這是關於 5G，你的 5G 計劃。然後你在電話中多次提到看到公共雲的進展。您能否給我們介紹一下目前正在發生的事情，您在 5G 和公共雲計劃中看到和經歷的事情？對此表示讚賞，凱文，你說過它有點停止，開始 - 有點停止，重新開始。但是很想了解你們所看到的情況，以及你們取得的進展。然後你認為這些，我不知道，如果事情對你有利的話，會對 12 月的季度產生影響嗎？

Good. Thank you for the question. Yes, we start to focus on 5G, Telco about 12 months ago. And now we already engaged a handful of good-sized customers. And they are very happy, very convinced with our product. So we see some production, some volume moving since last quarter. And those volumes will ramp up in this quarter and December quarter and especially for next year.

好的。感謝你的提問。是的，大約 12 個月前，我們開始關注 5G，電信公司。現在我們已經吸引了一些大型客戶。他們非常高興，對我們的產品非常有信心。所以我們看到一些產量，一些產量自上個季度以來有所變化。這些數量將在本季度和 12 月季度增加，尤其是明年。

And with our operation, growing in Taiwan aggressively now, we soon will be able to ship really high-volume product from Taiwan operations. And that's why it's the time, it's mature for us to start service large-sized cloud and data center. And we already are working with a couple of those potential customers. And the response, again, so far, have been very commendable. So we will continue to push those opportunities.

隨著我們的業務在台灣積極發展，我們很快就能從台灣業務中運送真正大批量的產品。這就是為什麼現在是我們開始服務大型雲和數據中心的時候了。我們已經在與其中幾個潛在客戶合作。到目前為止，回應還是非常值得稱讚的。因此，我們將繼續推動這些機會。

(Operator Instructions) And your next question comes from the line of Nehal Chokshi from Northland Capital Markets.

（操作員說明）你的下一個問題來自 Northland Capital Markets 的 Nehal Chokshi。

All right. Really nice June Q results, by the way. To me, significant narrative of the investment theme here is what you guys have been talking about returning to our heritage of gaining market share. So within that investment theme, can you characterize how you think you did in the June quarter? And what is embedded in your September quarter in terms of market share trajectory?

好的。順便說一句，6 月 Q 的結果真的很不錯。對我來說，這裡投資主題的重要敘述就是你們一直在談論的回歸我們獲得市場份額的傳統。那麼在這個投資主題中，你能描述一下你認為你在 6 月這個季度的表現嗎？就市場份額軌跡而言，您的 9 月季度嵌入了什麼？

Yes. I mean, last quarter, I started to share, we engaged with another 3-year business drive, right? Large 5G Telco, Large data center and cloud and then software AI and service. So indeed, all the 3 new drivers, we have been growing pretty healthy way. For 5G Telco, we already have some handful customer engaged. Large cloud, we have some customer engaged. And then software AI in service, we continue to gain customers satisfaction, and that's why we like to further promote the scope to service older customers around the world. And we expect that these -- the feedback will be pretty healthy for our business plan.

是的。我的意思是，上個季度，我開始分享，我們參與了另一個 3 年的業務驅動，對嗎？大型 5G 電信、大型數據中心和雲，然後是軟件 AI 和服務。所以事實上，所有 3 位新司機，我們一直在以非常健康的方式成長。對於 5G 電信，我們已經有一些客戶參與其中。大雲，我們有一些客戶參與。然後是服務中的軟件 AI，我們繼續獲得客戶滿意度，這就是為什麼我們希望進一步擴大服務範圍，為世界各地的老客戶提供服務。我們希望這些 - 反饋對我們的業務計劃來說是非常健康的。

Okay. And then for September quarter, do you expect that outperformance to continue, and that's what's embedded in your guidance, and therefore, you're actually expecting the overall market to be down as much as 15% year-over-year?

好的。然後對於 9 月季度，您是否預計這種出色表現會繼續下去，這就是您的指導中所包含的內容，因此，您實際上預計整個市場將同比下降多達 15%？

To be very directly, I mean, we just moved a lot of business to Taiwan, especially operations. And September, the impacts, the advantage from that should be limited. December, I would like to say will be much more significant. And then next year, we're sure we will see a lot of benefit from that.

非常直接地說，我的意思是，我們剛剛將很多業務轉移到台灣，尤其是運營。而 9 月的影響和優勢應該是有限的。十二月，我想說會更重要。然後明年，我們確信我們會從中看到很多好處。

I see. Okay. And...

我懂了。好的。和...

It will take some time to warm up.

預熱需要一些時間。

Yes. Understood. And then, Kevin, you mentioned -- gave some additional detail regarding order trends being relatively weak in July. Is it fair to say it was actually trending down more than 10% year-over-year during the month of July?

是的。明白了。然後，凱文，你提到過 - 提供了一些關於 7 月份訂單趨勢相對疲軟的額外細節。可以公平地說，它在 7 月份實際上同比下降了 10% 以上嗎？

Well, I'm not going to give a specific number like that, but July was one where it was certainly a weak month. And so we're glad that we've seen the trajectory turn here. So all of that is embedded in terms of the revenue range that we've given.

好吧，我不會給出這樣的具體數字，但 7 月肯定是一個疲軟的月份。所以我們很高興看到軌跡在這裡轉彎。因此，所有這些都包含在我們給出的收入範圍內。

Okay. And why was there a lack of the $9.5 million R&D credit? Can you give more detail on that? And how should we think about going forward?

好的。為什麼缺少 950 萬美元的研發信貸？你能詳細說明一下嗎？我們應該如何考慮前進？

Yes. So last quarter, if you recall, we had a significant onetime event where we received $9.5 million from a partner for a cancellation of a program. And that's all we're just saying.

是的。所以上個季度，如果你還記得的話，我們有一次重大的一次性事件，我們從合作夥伴那裡收到了 950 萬美元，用於取消一個項目。這就是我們所說的。

Got you. Okay...

明白了好的...

It was a discrete of significant magnitude last quarter.

上個季度這是一個非常重要的離散事件。

(Operator Instructions) And there are no further questions at this time. I'll turn the call back over to our presenters for some closing remarks.

（操作員說明）目前沒有其他問題。我會將電話轉回給我們的主持人，聽取一些結束語。

Thank you. I would like to thank you, our employees, customers and investors for their continued support. And thank you for joining us today and see you next quarter. Thank you.

謝謝。我要感謝您、我們的員工、客戶和投資者一直以來的支持。感謝您今天加入我們，下個季度見。謝謝。

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

女士們，先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。